WASHINGTON — The U.S. House of Representatives approved a GOP-backed student loan bill Thursday to address an impending July 1 interest rate hike on subsidized Stafford college loans by tying future interest rates to the market instead of allowing Washington to determine the rate.

The bill was approved on party lines, 221-198. Senate Democrats oppose the bill and the White House issued a veto threat on Wednesday, so its prospects are dim. Democrats want to extend current rates for two more years to allow more time to find a permanent fix.

However, if Congress doesn't act, Stafford loan rates will double from 3.4% to 6.8% this summer. About 7 million college students benefit from Stafford loans.

"We need a long-term solution to get us out of these annual, bi-annual, semi-annual political battles," said Education and the Workforce Committee Chairman John Kline, R-Minn. "We want to help students and we want to give them certainty and we want them not to have to rely on the whims of politicians here."

The House Republicans' proposal would tie loan rates to the interest rate on a 10-year Treasury note, plus 2.5 percentage points, with a cap that would prevent the interest rate on Stafford loans from rising above 8.5%. President Obama's budget called for setting the rate at slightly less than 1 percentage point above the Treasury note rate.

The GOP plan would also reset the loan rate for all borrowers every year based on market fluctuations, while under Obama's proposal, any borrower's initial loan rate would remain fixed for the life of the loan. The president is also seeking more flexibility for students to repay their loans.

Republicans say market-based loan rates will take Washington politics out of the interest-rate equation. Congress has the power to determine federal loan rates. The current 3.4% rate was set by Democrats in 2007, and was expected to return to 6.8% over a gradual period. Congress extended it for an additional year in 2012, during the height of the presidential campaign under political pressure from Obama.

Democrats compare the plan to predatory adjustable rate mortgage practices that helped fuel the housing collapse during the financial crisis. "We just saw that history in America. We saw what they did," said Rep. George Miller, D-Calif., the senior Democrat on the Education and Workforce Committee.